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The Most Profitable Chart Patterns To Trade Forex

Forex chart patterns are among the most used, reliable trading signals. There are tens of chart patterns to trade but a professional trader only uses the most probable chart patterns to make trading easy and to avoid confusion. Here you can find some of the best Forex chart patterns to trade.

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The Most Profitable Chart Patterns To Trade Forex

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  1. PartII ForexTrading Strategies 21

  2. 22

  3. 12.ChartPatternsTradingStrategy 12.1TheMostProfitableForexChartPatterns Formanyreasons,Forexchartsusuallyformsomerepeated patterns.Ifyouworkwiththemandyoureyesaretrainedby lookingatthem,thesepatternsareverypowerfultoolsto guideyouduringyourtrades.Therearemanypatternsand eachofthemhasitsnamebuttobesimpleandshortI explainhereonlythemostprofitablepatternswhichalways workandyoucanrelyon. 12.1.1MandW(Bat)Patterns Thesearethemostfrequentchartpatternsandmoreor lesshaveMorWshape.Sometimes,onelegextendsor anotherleggetsshort. Figure12.1.1.1AW(bat)pattern 23

  4. Thesearenotveryaccuratesignalsbuttheyhelpyoutoget aroughestimationofacurrencymove. 12.1.2Triangle(WeakeningMandStrengtheningW)Patterns ContrarytoMandWpatterns,triangle(orweakeningMand strengtheningWpatterns)areveryaccuratesignals(0.8or moreprobable).AweakeningMisformedwhenanupward (bullish)moveiscompleted,thenaweakerdownwardmove (onethirdorhalfofthefirstmove)happensandthenavery weak bullish (usually one candle) comes after it. After completion of the third move you can say with a high confidencethatthecurrencypricewillsharplydrop.Thisis the place you should sell the currency and make a nice profit.StrengtheningWpatternhasjustthesamestorybut inareverseorder. Figure12.1.2.1Atrianglepattern 24

  5. Thesepatternsaretradableintwoways.Thefirstisatthe timewhenonlythefirstfewbullishorbearishcandleshave formedandthemoveisinitshalfwaytogetmatured(reach asupportorresistancelevel).Atthistimewecanbuyorsell andwaituntilthemoveends(orbeginstoreverse),then close the trade with profit. However, these are short or mediumtimemovesandwecannotexpectsomanypips. Thesecondbetteruseistoenteratradewhenamovehas been matured and a reversal is expected. I also like weakeningandstrengtheningcascadepatternsbecausethey are very reliable, stable and frequent signals and with trainedeyestheyarequitepredictable. 12.1.4HeadandShouldersPattern Head and shoulders pattern as its name say is a price patternthatmoreorlessformsaportraitofamanwith headandshoulders.Thesearemorethan80%probable patterns and when the left shoulder and the head were formed,therightshoulderwouldbeatradableopportunity. Noticethatarightshouldertobetradablemustoverlap morethan80%withtheleftshoulder,otherwiseitwillnot beavalidpattern. Note that charting time frame is essential in detecting patterns.Forexample,youmaynotseeatrianglepatternon a1-hourchartbutwhenyouzoomoutthesamechartto4- hourtimeframethepatternappears.So,todetectperfect patternsyouhavetotogglebetweenvarioustimeframes. 28

  6. Figure12.1.4.1Aheadandshoulderspattern Figure12.1.4.2Areverseheadandshoulderspattern 12.1.5SolidWall(orSandwich)Pattern Thispatternnormallyconsistsof4-8alternatebullish/ 29

  7. bearishbarsandthepriceconsolidatesinaverytightrange in very straight line as if it has bumped into a solid impenetrablebarrier.Solidwallorsandwichpatternsare excellentpatternstotradebecausetheyarehighlyprobable andeasytotrade. Figure12.1.5.1Asolidwall(sandwich)pattern 30 Figure12.1.5.2Asolidwall(sandwich)pattern

  8. 12.1.6Fractals Fractalsingeneralareregularorsymmetric,self-repeating shapesinvarioustimescales.FractalsoccuronForexcharts and are very various in shape and size. If a fractal is detectedintheearlystages(whenthefirstorsecondfractal hasshaped),atradercanbenefitfromit.Tradingfractals needsmuchexperienceandusuallyonlyForexprofessionals canexploitthem. Figure12.1.6.1Afractal 12.1.7DoubleandTripleTop/BottomPatterns Atsupportorresistancelevels,pricesarenormallytested twoorthreetimesbeforeabouncebackorreversaltake place. This test and retest form double or triple bottom patterns at support and double or triple top patterns at resistancelevels.Youcanusetheminyourtrading. 31

  9. Figure12.1.7.1Atripletoppattern Figure12.1.7.2Adoubletoppattern 32

  10. Figure12.1.7.3Adoublebottompattern Exercise6.Gotohttps://www.tradingview.com/e/anddrawafewmajor currencychartsandtrytorealizeanyofthemostprofitablepatterns (triangle,cascade,headandshoulders). 13.PriceRejectionTradingStrategy As I said before, candles are the most beneficial visual presentationofthecurrencyprices.Therearetwotypesof candles.A.FullbodycandlesandB.Pinbars.Afullbody candleisacandlethatopensexactlyatthebeginningofa timeframeandclosesattheendofthatsametimeframe. So, the candle has a full body without any pin and its maximumandminimumpricesarethesameasitsopening andclosingprices. 33

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